July 29, 2008

The State of Foreclosures

Not surprising analysts and mavens alike, the California foreclosure problem escalates.  Both Dataquick and Foreclosureradar.com recently released numbers that paint a dismal picture on the state of foreclosures in the Golden State.

Dataquick’s stats and analysis indicate that we might be hitting a plateau as the numbers are starting to stablize a bit.  On first read I was reluctant to agree, but they also noted, “Most of the loans that went into default last quarter were originated between September 2005 and November 2006.”  Also noted was the fact that multi-loan mortgages peaked near the end of 2006.   This means we’re starting to near the end of the timeline for the dicier loans and seeing the fall out as prices increase.

I am anxious to see what happens, however, when the more appropriate, but still risky loans with 5 year-arms come up to expire in 2010 and 2011 and the home values still have not recovered.  We might see Round II then.

Worthy of Noting

• Orange County Sits Mid-Level:  According to Foreclosureradar.com Orange County does not lead the pack in the state for foreclosures.  Instead, the county actually saw a 2% decrease in foreclosures from May of ‘08.  But don’t get too excited yet, when compared to June of ‘07 foreclosures are up 247% .
• Less People Are Recovering:  Dataquick reports a year ago, just over half the people facing foreclosure were able to stay in their home, the numbers are getting less hopeful.  “Of the homeowners in default, an estimated 22 percent emerge from the foreclosure process by bringing their payments current, refinancing, or selling the home and paying off what they owe.” 
• It’s Hitting Home:    The Foreclosure Factor is undoubtedly taking a toll on the markets.  “Foreclosure resales have emerged as a significant market factor, accounting for 40.0 percent of all California resale activity last quarter. A year ago it was 5.4 percent.”